Mountlake Terrace is proud of its environmental features, such as Lake Ballinger, Hall Creek, McAleer Creek, and various wetlands, ravines, and terraces. This area is part of Water Resource Inventory (WRIA) 8, which is associated with Lake Washington. Trees contribute to the environment too, offering weather protection and air quality improvement. In order to guide development, environmental protection is carried out using critical area and shoreline standards, as well as SEPA regulations under Title 16 of the municipal code.
Mountlake Terrace's long term interest in a conservation plan was the catalyst for the preparation and adoption of a Sustainability Strategy. The strategy, adopted in August 2008, goes beyond just allocating natural or green spaces. It promotes an interdisciplinary system approach by integrating environmental quality, climate change, community liability and economic health elements.